IRS UPDATES
FICA Wage Threshold - The Internal Revenue Service (IRS) has increased the Social Security and Medicare wage threshold for household employers to $1,700 for calendar tax years 2009 and 2010. See IRS Publication 926, Household Employer’s Tax Guide For Wages Paid in 2009 and 2010 for more information.
1/13/10 IRS Notice of Proposed Rulemaking – Section 3504 Agent Employment Tax Liability (REG 13707036-08-01) - On January 13, 2010, the IRS issued a Notice of Proposed Rulemaking Regarding Section 3504 Agent Employment Tax Liability (REG 137036-080-1) [26 CFR Part 31] in the Federal Register vol. 75, no. 8, pp 1735-1738. The purpose of the proposed IRS Notice and changes in regulation is to amend current Federal employment tax regulations under this section of the IRC to allow a home care service recipient enrolled in one or more publicly-funded programs to designate an agent under this section of the IRC to report, file and pay all Federal employment taxes, including Federal Unemployment Tax (FUTA). Under the proposed regulation, the agent will be able to file a single FUTA return (Form 940) and make aggregate payments on behalf of multiple home care recipients who receive some public funds in a calendar to cover the cost of their care, as agents currently do for Federal income tax withholding (FIT) and Medicare and social security taxes (FICA) on the IRS Form 941. This proposed written guidance confirmed the verbal guidance provided by IRS staff at the December 2005 Government and Vendor F/EA FMS Conference held in Baltimore, MD. The proposed regulation also modifies existing regulations under §3504 of the IRC to be consistent with the organizational structure of the IRS and to update the citation to the IRC of 1986.
New IRS Form 941 Schedule R – Effective with the Form 941 due the first quarter of 2010, IRS will require tax payers (including Government and Vendor F/EA FMS providers) to file an aggregate Form 941, Employer’s Quarterly Federal Tax Return, as an agent authorized under §3504 of the IRC to attach the new Schedule R (Form 941), Allocation Schedule for Aggregate Form 941 Filers with the Form 940. This is a new requirement for agents and provides a line to allocate all the Form 941 entries to each client included on the aggregate return. Most aggregate filers will be able to file via e-mail or paper. However, if the aggregate filer is filing 10,000 or more clients, they must file a paper return. See Publication 1693, SSA/IRS Reporter, Spring 2010, and IRS Form 941 and 941 Instructions all available at www.irs.gov.
Upcoming New IRS Form 940 Schedule R Forthcoming from IRS – Effective for the Form 940 filing for calendar year 2010 and forward, IRS has reported it will require taxpayers (including Government and Vendor F/EA FMS providers) to file an aggregate Form 940, Employer’s Annual Federal Unemployment Tax Return, as an agent authorized under §3504 of the IRC to attach the new Schedule R (Form 940), Allocation Schedule for Aggregate Form 940 Filers with the Form 940. This will be a new requirement for agents and provides a line to allocate all the Form 940 entries to each client included on the aggregate return. More information should be available from the IRS in the fall of 2010.
PAPERS AND PRESENTATIONS
Dr. Flanagan is the author of Chapter 5: “Fiscal/Employer Agent Services,” in Developing and Implementing Self Directed Programs and Policies: A Handbook, originally published in 2009 and updated in 2010 by the National Research Center for Participant-Directed Services at Boston College in Chestnut Hill, MA